Fairbanks Rotary Luncheon. March 28, 2013 Kara Moriarty, Executive Director

Transcription

1 Fairbanks Rotary Luncheon March 28, 2013 Kara Moriarty, Executive Director

2 Purpose Alaska Oil and Gas Association Serve as single point of contact for Alaskans on the state s oil and gas industry Provide a forum for discussion and a point of decision on issues that affect the industry Mission Long-term viability of the Alaska s Oil & Gas Industry for the benefit of all Alaskans

3 AOGA Member Companies

4 Oil & Gas Has been Good to Alaska Jobs & Revenue State of Alaska has collected $160+ billion from oil & gas since 1959 Oil & gas continue to dominate state s unrestricted revenue, accounting for 93% ($8.8 billion) in FY 2012 State estimates 90% of its revenue will continue to come from oil and gas even with falling production Industry creates jobs and provides income for many 44,800 jobs and $2.65 billion in annual payroll (does not include State jobs, or jobs related to capital budgets) 1 = 9 - Nine oil industry-related jobs created in Alaska for every primary company job

5 C O M M U N I T Y

6 How Did we Get Here? Alaska s Tax Policy Has Changed Substantially Over the Years Pre 2005: Gross System w/economic Limit Factor (ELF) Recognized challenging economics as fields declined : Net System: Petroleum Production Tax (PPT) Net system to create incentives for exploration/development Increased state revenue as prices rise, regardless of size of field or production More than doubled taxes 2007-Today: Net System: (ACES) Still Net System Increased progressivity rates/added complicated regulations More than doubled taxes..again.

7 Where Are We?

8

9 Production Decline Is Real

10 Competition at High Oil Prices

11 Alaska Headed Out of Medal Contention 4th

12 Alaska Contributing 8% of U.S. Oil Production

13 A Grim Future Without Oil & Gas Sources of FY 2012 Unrestricted Revenue Oil and Gas Royalties & Taxes ($8.8B) 93% Excise Taxes ($170.8M) 2% Corporate Income Taxes ($98.5M) 1% Licenses & Permits ($42.3M) less than 1% Mining Taxes ($40.7M) less than 1% Fisheries Taxes ($32.7M) less than 1% Source: Alaska Department of Revenue Fall 2012 Sources Book

14 What does Alaska look like in 10 years? Scott Goldsmith, Institute of Social and Economic Research, UAA, "Maximum Sustainable Yield: FY 2014 Update," Web Note 14, January 2013

15 A Grim Future Without Oil & Gas Scott Goldsmith, Institute of Social and Economic Research, UAA, "Maximum Sustainable Yield: FY 2014 Update," Web Note 14, January 2013

16 Governor Lays out Principles for Oil Tax Reform Anchorage Daily News, Jan. 6, 2013: Reform must: Be fair to Alaskans Encourage new oil production Be simple and restore balance Be durable and long-term in nature

17 Governor Lays out Principles for Oil Tax Reform Anchorage Daily News, Jan. 6, 2013: Reform must: Be fair to Alaskans Encourage new oil production Be simple and restore balance Be durable and long-term in nature AOGA Recommendation: Avoid changes that artificially creates winners & losers

18 AOGA Supports Components of CSSB 21 (FIN) am(efd fld) Cornerstone for significant and crucial tax reform Support the elimination of progressivity Support the concept of gross revenue exclusions Support the transferability of loss carry forward credits Support the manufacturing credit Support lower statutory interest rate

19 Base tax rate is too high AOGA Concerns with CSSB 21 (FIN) am(efd fld) Serious concerns with how the bill addresses tax credits (QCE elimination, no extension of small producer and exploration credits) Does not support the Competitiveness Review Board Gross Revenue Exclusions for legacy fields needs clarity and certainty. Identified other ways to improve policy (repeal minimum tax, and allow DOR to use joint-interest billings)

20 Work Together. Win Together. Alaska Needs a Strong Oil Tax Policy that achieves production from new & legacy fields Continue to evaluate the bill to look for ways to accomplish Gov. s Goals Stand ready to assist in achieving long-term policy for Alaska